Friday, December 14, 2012

Obama's visit to Myanmar: Implications for India

President Barack Obama’s visit to Myanmar last month was recognition of measures taken by the current regime towards opening up of Myanmar. The visit has largely been viewed as a part of the Asia Pacific ‘pivot’ announced by the US President in November, 2011. Further, the US was also aware of significant inroads being made by the European countries particularly Germany, UK and France in Myanmar and therefore, did not want to be left behind especially in the era of economic downturn

The visit took place despite the fact there was a lack of consensus in Washington on the Myanmar policy with resistance from human rights groups as well as from nuclear non proliferation lobby given the revelations of North Korea supplying some missile related material to Myanmar.

Political Gains

From the political perspective the visit has had a significant impact. Firstly, this has reinforced the commitment of President Thein Sein and the reformers who are flagging the benefits that have been received post opening up of polity and economy. The government was quick to release another set of political activists prior to the visit; such tools may be used again for greater concessions from the US and the West.

Secondly, the separate meetings that President Obama had with President Thein Sein, Aung Suu Kyi as well as the parliament speaker U Swe Mann is indicative of the broad based approach that the US is following to support the reforms.

A major advantage gained in Myanmar was for civil rights groups, political activists and human rights agencies given that the space for information and activism has considerably opened up by the Obama visit.

From Indian perspective, there is a hope that the course of reforms would be progressive even though they may occur at a relatively gradual pace. There is a general belief that the core of resistance from the military is likely to continue and they need to be pushed by the international community in the right direction. India has continued with a broad based and balanced relationship with political leadership as was evident from the highly successful visit of Aung Suu Kyi to the country in November. The military in Myanmar was also engaged through the visit of the Chairman Chiefs of Staff Committee Air Chief Marshal Norman Browne to Myanmar in November.

Moderating the Chinese Influence

Myanmar’s recent political and economic reforms seem to have been driven by Naypyidaw’s desire to reduce its overdependence on China.

With the U.S. and the Western nations engaging Myanmar, the strong influence of China in Myanmar is likely to be impacted. Due to China’s imposing presence and its exploitation of Myanmar’s resources against the popular will there has been considerable public opposition to the Chinese projects. Last year, construction of Myitstone dam was suspended by the President, Thein Sein. The opposition against the project brought together conservationists, environmentalists, Kachin activists and the political opposition. Popular opinion has been building up against some of the other Chinese sponsored projects in Myanmar. Recently, there have been protests against a copper mining project in Monywa, Sagaing Division, jointly undertaken by China and a military sponsored local company. An enquiry commission headed by Suu Kyi has been appointed to investigate the issue.

China’s larger interests are likely to be certainly affected, but to what degree and extent is not clear so far. Firstly, China may lose its sole beneficiary and benefactor role but only to become the most preferred one. The subsequent developments would also be dictated by what stand the next governing duo in China, Xi-Le take to ensure primacy in Myanmar.

Meanwhile, Myanmar’s leadership has been attempting to balance its emerging relationship with the U.S. and China. President Thein Sein visited a trade fair in China in September and Soe Win, the Deputy Commander of the Burmese army headed a military delegation to Beijing for strengthening military and cultural ties before the Obama visit.

Secondly, the links between Yunnan province of China and Myanmar are well established and are thus likely to be sustained.

Thirdly, the U.S. has not lifted sanctions on trade of jade and related items, a crucial component of trade with China; thus trade relations with Yunnan/China are not likely to be impacted.

Fourthly, entry of major global energy players in Myanmar may be a setback for Chinese companies as increased competition would prevent greater off-takes for Beijing.

In addition, the US offer to the Myanmar army to participate in the Cobra Gold Joint exercises in Thailand in 2013 is also being seen with much wariness in Beijing. These exercises have now expanded from a bilateral U.S.-Thai format to a multilateral one with many American allies such as South Korea participating in the same.

On the whole however Beijing is likely to remain wary of the US attempting to make an imprint in its backyard and in other parts of South East Asia. Additionally, increased engagement with the U.S. and the west could also be useful to Myanmar to extract more developmental and economic aid as well as trade and economic concessions from China. Beijing would have to tread cautiously to keep Myanmar under its sphere of influence by adjusting its policies to suit the new circumstances.

Security Concerns

From the security point of view, Indian concerns are mainly related to firstly the influence of PLA through military largesse to the Tatmadaw (Myanmar armed forces) and sanctuaries offered to the North East militant groups in Myanmar and the ongoing conflict in Kachin areas. The U.S. President was non prescriptive during his visit on the ethnic issues and only highlighted challenges faced by the country. India needs to further strengthen its own equation with Myanmar government in order to curtail anti India activities by some of the Myanmar based rebel groups.

In the military field, India is ramping up cooperation with high level visits by the Defence Minister Mr A K Antony in January, 2013 and the Chairman Chiefs of Staff Committee and Chief of the Air Staff, ACM Norman Browne who visited Myanmar last month. Myanmar army is looking for hardware and there is some scope for India to provide items such as transport aircraft, helicopters and so on as well as expand training and capacity building.

Balancing of Chinese influence off the Myanmar seaboard with the entry of the U.S. is also likely and could be seen to be beneficial from the perspective of maritime interests of the country. However, this will continue to be a contested zone in the long term as China is unlikely to give a free run to others in the area which it sees as critical to its energy security.

Opening of the Myanmar economy presents a good opportunity for India to strengthen its trade and economic relations besides increasing venues for Indian investments in resource rich Myanmar. Hopefully, Myanmar’s engagement with the west would lead to some progressive reforms in governance supported by the US and Western institutions including the non government sector, aid agencies and business. Entry of international agencies such as World Bank, IMF, ADB and others is likely to lead to expansion of the economy particularly in terms of effective regulations for investment and conduct of business. Moreover, unlocking of Myanmar’s resources particularly oil and gas could be seen as beneficial to India given its dependence on West Asia so far. These factors indicate that support to transformation by Mr. Obama during the visit may provide an indirect impetus to Indian plans of economic engagement in Myanmar particularly to boost bilateral trade planned to increase from the paltry US$ 1070.88 million in 2010-11 to over USD 5 billion by 2015.

Impact on India's Look East Policy

Myanmar being the land route to South East Asia is the lynchpin of India’s Look East Policy (LEP). In addition, the Chennai-Dawei sea corridor is seen to be another growth highway for the LEP. With the opening of Myanmar economy the LEP is likely to get a boost. This apart the overall development of infrastructure including the railway and road network, ports and transportation is seen to be beneficial for the LEP and the prospects are likely to be enhanced. In this it is India’s own inefficiencies in project implementation that is of concern for New Delhi and how it will be able to get its act together remains to be seen?

There is a need to explore the scope for joint India China infrastructure projects in Myanmar to include oil and gas, transportation both road and rail and construction of dams. Indian and Chinese companies are presently engaged in the Shwe gas and pipeline projects which may provide a model for the future. GAIL and ONGC Videsh Ltd. own a 30% share in the A1 fields and intend to acquire a share in the A 2 fields which could be jointly exploited along with other majors such as Daewoo Corporation.

India also has a large number of projects in the pipeline in Myanmar many of which are languishing due to lack of impetus and tardy implementation. These include upgradation and resurfacing of Tamu-Kalewa-Kalemyo road; construction and upgradation of the Rhi-Tiddim Road; Kaladan Multimodal Transport Project and high speed data link in 32 Myanmar cities. ONGC Videsh Ltd. (OVL), GAIL and ESSAR are also working in the energy sector in Myanmar. M/s RITES is developing the rail transportation system and is supplying railway coaches and locos. Tamanthi and Shwezaye Hydro-Electric Power projects are also in the pipeline.

How much progress can be achieved in this direction will depend on the trust that each country, India and China can repose on each other and a favourable equation that can be worked out by the enterprises in what Chinese term as, “win-win,” agreements.

India- West joint projects also have major prospects in the fields indicated above. Some initiative will have to be taken by the Indian industry as well as such bodies as the CII which has a programme of cooperation Union of Myanmar Federation of Chambers of Commerce and Industry (UMFCCI). Indo-US/EU Business Councils and similar organizations may act as a catalyst for this purpose. A joint initiative will pay rich dividends in this direction.

Further, with Myanmar slated to chair the ASEAN Summit of 2014 it would also make efforts to move positively on the path of democracy and further political and economic reforms.

Finally, the domestic reform in Myanmar and its reconciliation with the U.S. and the West is expected to open up many economic and strategic opportunities for Myanmar. India is well positioned to cement its growing economic and strategic engagement with Myanmar both on bilateral and multilateral basis. Myanmar’s steps in balancing its relationship with China need to be supported. For India, Myanmar will remain a strategic land bridge for engagement of South East Asian nations. Improving regional connectivity and integration of regional economies would serve the interests of both Myanmar and India well.